- Their offering is an ETF meaning - it will be traded on the stock exchange (NSE) after the new fund offer (NFO) period (between February 15 and 23rd, 2007) like any other stock.
- The "face value" is Rs. 100/- for 1 gram of gold and today's market price (say Rs 860/gm) would mean that the units are sold at a "premium" over the FV of Rs 760/-
- You can buy and sell the units of the MF on the exchange and you can also choose to get physical delivery of the gold or decide to deposit gold to obtain units (no details on how the logistics will work here)
- Fees:Investment management fees is 1.25% p.a. of the weekly average net assets outstanding for amounts up to Rs.100 Crores and 1.00% p.a. of the weekly average net assets outstanding for amounts above Rs. 100 Crores. There is no entry/exit load post listing for the fund but you will end up paying brokerage since these transactions are treated as stock. During NFO, the entry load is 1.5% upto 50L of investment
- The custodian (person responsible for managing the physical gold) is The Bank of Nova Scotia
- The scheme will have 90%-100% of their portfolio in physical gold and 0%-10% in Money Market instruments, Securitised Debts, Bonds and cash
- NAV : NAV will be calculated like any other mutual fund and will include all the expenses of the AMC. But they have the concept of a "creation unit" which represents 1000 units plus some cash component which is equivalent to apparently 1KG of gold. This creation unit applies only when you exchange physical gold for the Bees units. This is a facility available only to authorized participants (how are they determined? I dont have a clue!). So when an authorized participant reedems one creation unit he receives 1 KG of gold. I did'nt quite understand their example of buying creation units by depositing gold on Pg 26 (why did the assumption of price of gold drop to 850 from 860?). If someone can figure it out, let me know.
- You can pledge these units similar to the loan against shares schemes.
- Tax : This fund will be treated as a mutual fund other than equity which means that it will not get the benefit of short term (10%) and long term (0%) tax rates.
Well thats all for now folks. Please add your comments if you found more information.